We now have a millionaire in the White House, and several more in his cabinet. With all this talk of money, conflicts of interests and donations, you may be comparing yourself to those in power, and finding that you're intellectual equals. Most of Generation Z fancies itself superior to them. Yet most of Gen Z is lacking in comparable financial resources. The difference comes down to wise investing.
Whether you're interested in the real estate market like Jeff Sessions, or are more interested in a more diversified portfolio, learning how to and where to invest your hard earned cash can be the best way to grow your account without any further effort on your part. However, investing is a gamble - you can just as easily lose it all if you guess wrong.
So, how can you know? Follow the money. Here are the top five lessons you learn about investing from today's top millionaires:
Don't Dismiss Natural Resources
We live in a technology driven world, and it's likely the majority of the investment news you hear daily is about venture capitalists who got rich quick funding the next startup (Slack is a great example of this). However, don't forget that every piece of tech - as well as every aspect of our lives - relies on the availability of core resources.
The biggest one many people overlook? Precious metals.
"Gold, silver and platinum are of course seen as valuable by everyday consumers," comments Jonathan Rose, the Founder of Capital Gold Group, as well as a Series 3 Commodities trader and one of a few distributors for the U.S. Mint. "However, many overlook how intertwined the precious metals industry is with innovation and technology today. Tech - from cell phones to biotech innovations - all require precious metals to function, including gold, silver, platinum, palladium and more. The two industries actually drive each other symbiotically, and as an investor, it's important not to lose sight of that. It's what you might call a golden opportunity to invest in tech, without the hefty price tag that comes with software brands."
If you're looking at a crowded industry with expensive stocks, and find that much of what you're interested in is out of reach despite your confidence in their future success, take a step back and look at the resources that industry needs to thrive.
Invest In What You Understand
This sage wisdom comes from Peter Lynch. The core of this principle is to not follow trends when investing, but instead work out the logic of why you think a company is more likely to succeed than its competitors. This requires you to have an in-depth knowledge of the industry or the desire to develop one.
Many people lose their fortunes - or plummet themselves into bankruptcy - by investing in companies that had great marketing and were on trend. Because they didn't prioritize understanding why the brand was on trend, they effectively crowdsourced the dispersal of their personal cash.
However, this doesn't mean you should only invest in the industry you're currently employed in. As Lynch has been quoted as saying many times, "don't invest in any idea you can't illustrate with a crayon." If it's more complicated than a few sentences, it's much more likely to fail.
Start With A Diverse Portfolio, Then Pare Down
When you first start investing, it's important to cast a wide net. Having a diverse portfolio - many investments in many industries - offers the security of knowing that no one industry underperforming will ruin you.
However, over time, you'll gain a greater understanding of the industries you're invested in. As you see how it all works, and learn to predict the ebbs and flows of the account you hold, don't be shy about narrowing your focus on those companies you're confident will net you the best returns.
This tip does not apply to those who are not interested in continually studying various industries, and being highly active and involved in their investing. If you're leaving it all to the broker at your bank, keep your portfolio diversified and you'll do just fine. However, if you truly want to be a millionaire, and it's a priority for you, learn about the industries you're giving money to. Understand why stocks change - what made it dip? What made it rise? This will be part understanding of the industry, part understanding of psychology and crowd mentality. As Warren Buffet once said, "wide diversification is only required when investors do not understand what they are doing." Once you feel confidence, it's a good idea to switch from that wide net to the fishing pole.